Amara Finance: Real-time release of LP liquidity, reconstructing "DeFi 2.0"

Author: Baihua Blockchain

Since the beginning of this year, although users in the crypto space have been drawn to hot topics in industries like NFTs, GameFi, and the Metaverse, according to The Block Research analysis, about a quarter of the funding in the crypto sector has been directly allocated to DeFi, amounting to as much as $1.9 billion.

In the future of 2022, DeFi, Web 3, and NFT/Gaming will continue to be important areas that require attention. Recently, Amara Finance, touted as the next-generation DeFi pioneer, has been making waves and attracting a lot of attention:

Amara Finance is a next-generation DeFi protocol deployed across multiple chains, dedicated to becoming a multi-chain aggregation DeFi platform. One of its core products, the multi-signature cross-chain protocol AmaraLink, which won third place in the 2021 Shanghai Wanxiang Blockchain Hackathon finals, is set to be pre-launched in late January.

It plans to bridge popular public chains such as Moonriver, Ethereum, Polygon, Solana, and BSC. It has also established partnerships with projects like ExNetwork and DEC.venture.

To this end, Baihua Blockchain invited Amara's Chinese community ambassador Eva last Thursday to share relevant content with us. Below is the original interview:

Introduction to Amara Finance

Baihua Blockchain: Welcome, Eva, to Baihua Talks. First, could you briefly introduce yourself and Amara Finance?

Amara Eva: Hello, friends of Baihua Blockchain. I am Eva, currently serving as the Amara Chinese community ambassador. My main responsibilities include marketing promotion, business connections, and localized operations. Today, I am honored to be here in the Baihua community to introduce Amara in plain language.

First, let me briefly introduce Amara. Amara Finance is a next-generation DeFi protocol deployed across multiple chains, dedicated to becoming a multi-chain aggregation DeFi platform. Amara Finance has three core DApps:

Including the LP liquidity borrowing protocol AmaraLend,
The multi-signature cross-chain bridge AmaraLink based on Chainsafe solutions,
And a global gateway payment protocol AmaraPay.

Many people know that Amara Finance belongs to the Polkadot ecosystem, but Amara also has the ambition for multi-chain deployment, not only to establish itself in Polkadot but also to bring more ecosystems and users into Polkadot, becoming a multi-chain aggregation DeFi platform.

AmaraLink's Cross-Chain Bridge

Baihua Blockchain: It is understood that one of Amara's core products, the multi-signature cross-chain protocol AmaraLink, will be pre-launched in late January and plans to bridge popular public chains such as Moonriver, Ethereum, Polygon, Solana, and BSC.

What changes will the launch of AmaraLink bring to the asset transfer methods across different chains, and how is it specifically achieved? Please give us a brief overview.

Amara Eva: First, let’s talk about the industry's demand for bridges. We know that in the future DeFi scenarios, with the rise of application-oriented public chains, cross-chain is a necessity.

In the past, Ethereum was the only standout, but now we see BSC, Solana, Polygon, Avalanche, and other public chains emerging, creating a diverse and competitive landscape, which has generated user demand for cross-chain asset transfers.

Now, regarding the product progress of AmaraLink: According to Amara's scheduled development timeline, AmaraLink is set to go live in late January to early February 2022. The version launched in this phase will connect the two major ecosystems of Polygon and BSC, realizing cross-chain transfers of "specific assets" between Moonriver and the Polygon and BSC networks.

After AmaraLink goes live in January, we will add other public chains, such as Solana and Harmony, based on the project's pace.

Global Payment Tool AmaraPay

Baihua Blockchain: The latest version of the Amara website 3.0 has been launched, showcasing Amara's latest technological developments and ecosystem progress.

It mentions that AmaraPay will be launched after AmaraLend and AmaraLink are completed, allowing users to exchange local currencies and digital assets in globally compliant regions, supporting over 60 countries and regions. What impact will the launch of AmaraPay have on users' lives?

Amara Eva: Thank you for your interest in AmaraPay. To put it simply, it is very challenging for any technical team to develop three products simultaneously. In Amara's product positioning, AmaraLend is the most important.

AmaraLend is the LP liquidity borrowing protocol, which helps users achieve higher APY while allowing them to collateralize LP to borrow USDA (Amara's algorithmic stablecoin), fully releasing LP liquidity. AmaraLend is the most innovative product in Amara's entire ecosystem layout and serves as the foundation of Amara.

AmaraLink is our independently developed multi-signature cross-chain bridge, enabling cross-chain transfers of specific assets between Moonriver, Polygon, and BSC, AmaraLink will serve as the gateway for users to enter the Polkadot ecosystem. AmaraPay is a global non-aggregated gateway payment protocol and an important supplement to the Amara ecosystem.

The impact of AmaraPay on users will be significant. If you are a user in any compliant region globally, the following impacts will occur:

First, it supports users in using fiat currency from any compliant country or region to purchase specific digital assets.
Second, it supports users in applying for physical asset cards or virtual cards to better manage their digital assets.
Additionally, it supports users in most regions globally to make purchases with their cards, with digital assets in the card being convertible to USD for spending at any time.

It can be said that AmaraPay essentially bridges the gap between traditional finance and blockchain finance, achieving low-friction and efficient circulation between the two. In the future, digital assets will be connected to various aspects of our real lives, and we will be able to use and leverage them in our daily lives.

Next DeFi

Baihua Blockchain: Alright, let's talk about DeFi next. As a project dedicated to multi-chain deployment, Amara has already launched three core products: AmaraLend, AmaraLink, and AmaraPay, while also aiming for better cross-chain collaboration.

It has chosen to jointly build a DeFi collaboration center connecting the Polkadot and Off-DOT worlds: Next DeFi. Compared to DeFi 1.0, the mention of "Next DeFi" here has breakthroughs and advantages. How do you view the subsequent development of DeFi?

Amara Eva: We have three major product lines, but DeFi 2.0 mainly refers to AmaraLend v2. AmaraLend V2 is the most creative product ecosystem of Amara.

We know that there are many borrowing projects on the market, people are keen to copy projects from 1 to N, but there are few that innovate from 0 to 1. Innovation comes with risks and requires significant investment of time and resources.

Since its inception, AmaraLend has undergone several rounds of evolution and iteration, ultimately finding its place in the DeFi world. Initially, the idea behind AmaraLend was simple: to create a multi-chain borrowing platform focused on long-tail assets, in other words, a borrowing platform for high-quality small-cap assets.

Later, the Amara team refined the product further. There were many ideas and constructive feedback from investors, which ultimately formed the model of AmaraLend v2: an innovative product. To make it easier for everyone to understand, I have annotated the technical architecture diagram.

In summary, AmaraLend is about releasing LP liquidity.

In the DeFi space, the scale of LP interest-bearing assets is enormous, but they are often referred to as sleeping assets due to the lack of suitable "destinations." For the average user, after providing liquidity on a DEX, LPs are just left sitting in their wallets.

In AmaraLend v2, users will deposit their LPs into the Amara automatic reinvestment module, which has two benefits.

The first benefit is that Amara will automatically place the user's LP into the DEX to earn rewards, and the generated rewards will be automatically reinvested, creating higher APY for users.

The second benefit is that after depositing LP, users can use their LP as collateral to borrow AmaraLend's algorithmic stablecoin USDA while also earning reinvestment rewards, creatively releasing LP liquidity. Of course, USDA can also continue to participate in the model cycle to maximize returns.

Safety Guarantees and Measures

Baihua Blockchain: When it comes to DeFi, security issues are crucial. After all, there have been numerous incidents this year involving hacks targeting trading platforms, wallets, and DApps.

For example, in mid-December, the yield farming platform GrimFinance on the Fantom chain suffered a flash loan attack, resulting in losses of over $30 million. What technical guarantees and measures does Amara have in terms of security?

Amara Eva: This question is quite challenging. Security is indeed a problem that the entire DeFi industry must face, and it is a sword of Damocles that hangs over us at all times.

From the very beginning of product design, Amara has always placed a high priority on security and has taken many practical measures to ensure the safety of user assets and avoid attacks.

For instance, the CRV stablecoin exchange protocol. This is also the reason why we chose to launch AmaraLend v2 on BSC. Additionally, in terms of mechanism design, AmaraLend introduces an insurance plan to reduce bad debts.

Moreover, we conduct audits, and when necessary, we can invite multiple auditing firms to perform cross-audits on the code to enhance the effectiveness of the audits. All of Amara's products will undergo audits before being released. Amara also welcomes tech enthusiasts to report any bugs to us.

Wanxiang Hackathon

Baihua Blockchain: Alright, we see that at the 2021 Shanghai Wanxiang Blockchain Hackathon, AmaraLink participated and won third place in the hackathon, receiving funding from the Polygon Development Support Program.

We also noticed that AmaraLink applied node TEE technology in this competition. What role does TEE play in Amara? What does this funding mean for Amara and Polygon?

Amara Eva: We won third place, specifically ranking among the top 6 out of over 40 teams. Prior to this, we had already received funding from Polygon. This question was also asked by the judges on-site, who seemed to be from Polkadot.

The important role of TEE in AmaraLink is to prevent nodes from acting maliciously. Since node machines can be hacked, TEE mainly prevents binary code from being compromised.

Additionally, AmaraLink's nodes will support up to 200 nodes, using the DRAND algorithm for verification, taking the XOR distance of five nodes. Of course, the technical details can be found in our later published documents.

For Amara, the funding from Polygon is recognition of our team's technology. For Polygon, AmaraLink can achieve the conversion of assets between the Polygon and Polkadot ecosystems, which is very much needed for both Polygon and Polkadot.

Ecosystem Cooperation

Baihua Blockchain: Thank you, Eva. In terms of cooperation, Amara has already received support from ExNetwork and DEC.venture, and has also established partnerships with Moonbeam, Polygon, and other partners within the ecosystem.

In addition, what other institutions has Amara collaborated with, and which teams will join the Amara ecosystem?

Amara Eva: As you can see on our official website, we don't have many partners listed. Because only those with substantial cooperation products or businesses and have achieved phased cooperation results are placed on our website.

Currently, we have a practical cooperative relationship with Phala Network; our initial AmaraLink was launched in collaboration with Phala, although it has since undergone technical iterations or restructuring. There is also Polygon, which provided us with a grant to support our bridge development.

Additionally, Ins will collaborate with us on AmaraPay. We have also integrated Chainlink's price feed system into our product.

Of course, Moonbeam has provided us with a lot of support. Although some major news has not been officially announced, it is significant for us. Furthermore, friends who follow us on Twitter will notice that we also have Harmony as a partner, and our AmaraLend will be deployed across multiple chains on the Harmony network. Recently, we have also been in touch with Solarbeam, the largest DEX on Moonbeam.

There are also some partners we are currently in talks with, including star projects in the Polkadot ecosystem, but we cannot disclose them at this time.

Hot Topics Discussion

Baihua Blockchain: Indeed, SocialFi is currently one of the hottest concepts in the industry. Since the beginning of this year, concepts like NFT, GameFi, and the Metaverse have exploded in popularity. How do you view the relationship between these three?

The recent boost from Web 3.0 and NFTs has triggered a new wave of enthusiasm. What are your thoughts on this, and how do you think Web 3.0 will change SocialFi?

Amara Eva: The three are indeed interconnected, and their boundaries are becoming increasingly blurred, leading to gradual integration in the future. Although their concepts are slightly different. For example, the 2017 game CryptoKitties, excluding its "pass-the-parcel" nature, is essentially a combination of NFT and GameFi.

NFTs, as non-fungible tokens, initially satisfied the self-identification of crypto geeks, and now they have become collectibles of crypto art. However, due to their nature, NFTs are destined to remain niche.

GameFi has enormous potential; gaming is one of people's basic needs, and its combination with blockchain has produced many new gameplay. GameFi is easier to implement, and I am very optimistic about its future development.

From my perspective, many traditional gaming institutions have already entered the GameFi space, bringing professional artists, technology, and marketing, which adds a lot of imaginative space to this industry.

The Metaverse is more of a concept; many contents can be described as part of the Metaverse, but there is no unified definition. Moreover, the Metaverse is equally popular both inside and outside the circle.

In short, it’s about entering and exiting the circle. The relationship between the three can be interpreted as nested dolls, with NFTs being the most niche, satisfying identity signaling and crypto art collection needs.

GameFi is the most grounded, already showing a relatively clear industrial chain. The Metaverse is the broadest, representing a future revolution in thinking, with many new opportunities arising in the Metaverse, both inside and outside the circle.

In fact, we are usually busy with Amara, but during our busy schedule, we still keep an eye on SocialFi. SocialFi will be one of the hot topics in the near future, and this has already become a consensus in a small circle.

The topic of the first-level circle has already become a hot discussion. Just like the demand in the crypto circle has fueled the popularity of Telegram, on-chain Medium and on-chain Twitter will also be hot topics in the future.

In fact, there are already excellent teams focusing on various public chains and applications in the SocialFi space, and they have garnered some attention. I believe that SocialFi will become a hot topic in the future.

As for Web 3.0 being the foundation for the rise of SocialFi, for example, with ENS, we have already seen people using it. As Web 3.0 matures, SocialFi will become more widespread.

Future Plans

Baihua Blockchain: Okay, recently, Amara has joined the SocialFi Metaverse ecosystem project Torum. Does this move indicate that you are considering entering SocialFi or other fields like GameFi and the Metaverse? If so, in what aspects? Lastly, are there any other noteworthy projects or developments from Amara that you can share?**

Amara Eva: Haha, SocialFi is very popular and will become even more so in the future, but unfortunately, Amara currently has no related plans. SocialFi has great prospects, and Amara is actively paying attention to it. However, the priority is to refine Amara's existing business and do our job well.

You can look forward to the initial liquidity incentive plan for AmaraLend v2 before its launch, similar to how Polkadot users participate in parachain slot auctions. The initial liquidity incentive plan for AmaraLend v2 is the best opportunity for ordinary users to participate in Amara.

You can also check the TVL three months after the launch of AmaraLend; the LP assets on the market are still very substantial, and unlocking these sleeping assets is beneficial for both users and the entire industry.